Under Armour to Pay $434M in Class Action Settlement
BALTIMORE, MD – Under Armour, Inc. has agreed to a $434 million settlement in a class action lawsuit, according to a recent SEC filing. The apparel company, headquartered in Baltimore, Maryland, reached a Memorandum of Understanding (MOU) on Thursday, resolving allegations of misleading disclosures and accounting practices.
The lawsuit, dating back to early 2017, involved claims related to the company's sales between the third quarter of 2015 and the fourth quarter of 2016. Under Armour and its executive, Mr. Plank, were accused of violating Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.
The settlement, which is not an admission of wrongdoing by Under Armour or Mr. Plank, will see the payment of $434 million to affected Class A and Class C common stockholders who acquired shares between September 16, 2015, and November 1, 2019. The company reported having $858.7 million in cash and equivalents as of March 31, 2024, and has not utilized its $1.1 billion revolving credit facility.
In addition to the financial compensation, Under Armour has agreed to maintain separate roles for the Chair and Chief Executive Officer for at least three years after the final court order. Furthermore, performance-based vesting conditions will be applied to stock grants for key executives during this period.
The settlement is pending preliminary and final approval by the District Court following a notice and review period for class members. Under Armour had previously set aside a $100 million accrual for legal contingencies related to the case and expects the total accrual to reach the settlement amount in the first quarter of the fiscal year 2025. The company plans to use balance sheet cash and potentially borrowings to fulfill the settlement, with a portion expected to be covered by insurance, although ongoing litigation with insurers remains unresolved.
This settlement comes as part of Under Armour's efforts to address claims from its past and does not reflect the current state of the company's operations or management practices.
